This article aims to introduce the Supreme Court Judgment of 26 April 2024[i] (Roudou Hanrei No. 1308, p. 5, Employee v Shiga Prefecture Social Welfare Council) which is a case concerning the validity of a reassignment order issued by an employer without the consent of an employee when there is an implied agreement between the employee and the employer to restrict his job title and duties.
I. CASE DETAILS
The employee had been hired in March 2001 as an engineer for the modification, manufacture and development of technology for welfare equipment. He worked for the employer until 1 April 2019, when he received from the employer a reassignment order to change his job title and duties. Thereafter, the employee disputed the validity of the reassignment order, claiming that the reassignment order was a breach of the agreement to limit his job title and duties. Consequently, he filed a claim for damages based on default of obligation or tort for emotional distress caused by the reassignment order.
In this case, there was no written agreement that the job title was to be limited to ‘engineer’; however, the employee had numerous technical qualifications and was recruited and hired as he was expected to be able to weld. In addition, he had worked in the same technical position at the workplace for 18 years, during which time he was the only engineer there who could weld. As the High Court Judgement was disadvantageous to the employee, the employee filed the appeal to the Supreme Court, so in the case, the appellant is the employee and the appellee is the employer.
II. HELD
‘When there is an agreement between the employee and the employer to specifically limit the employee’s job title and job duties, we understand that the employer shall not have the authority to order the employee to be reassigned in violation of the agreement without the employee’s consent. Based on the above facts and circumstances, there was an agreement between the appellant and the appellee that the appellant’s job title and job duties would be limited to engineer-related tasks regarding the work in question; therefore, from the outset, the appellee did not have the authority to order the appellant to be reassigned to the general affairs division, facilities management without his consent.
Thus, with respect to the reassignment order that was made by the appellee to the appellant without his consent, the original trial court’s judgement, assuming the appellee had the authority to make this reassignment order and concluding that it shall not fall under an abuse of rights, is a clear statutory violation that affects the result of the judgment.’
III. ANALYSIS
Under Japanese law, a long-term change in job type, job description, or work location under the same employer is called a ‘reassignment’. In Japan, the Work Rules often include a provision stating that the employer has the right to order reassignments for business reasons; accordingly, this right is usually interpreted as part of the labor contract. In addition, given that dismissal is not easily permitted under Japanese law, it has been held that an employer can effectively exercise its right to order reassignment on condition that it does not constitute an abuse of rights (article 3, paragraph 5 of the Labor Contracts Act (Act No. 128 of 2007); Supreme Court Judgment of 14 July 1986, (Roudou Hanrei No. 477, p. 6, Employee v Toa Paint).
On the other hand, when there is an agreement between an employee and an employer to specifically restrict and limit the employee’s job title or job description, such agreement tends to be respected to a certain extent. For example, in the cases of a TV announcer (Tokyo District Court, Decision of 23 July 1976, (Hanrei Jiho No. 820, p. 54, Employee v Nippon Television Network Corporation)) and a university professor belonging to the faculty of pharmacy (Utsunomiya District Court, Decision of 10 December 2020, (Roudou Hanrei No. 1240, p. 23, Employee v International University of Health and Welfare)), the courts ruled that implied agreements to limit the job titles and job duties were found based on the circumstances of these cases, including the hiring process of each worker, and that the reassignment orders contrary to these agreements were invalid.
However, there was a case in which a court denied an agreement to limit the job title and job duties even if the employee had been engaged in the same job title and job duties (machinery engineer) for many years (Supreme Court Judgment of 7 December 1989, (Roudou Hanrei No. 554, p. 6, Employee v Nissan Motor Corporation, Murayama Factory), and at least previously, court precedents appeared reluctant to find the existence of agreements to limit and restrict job title and job duties (See Kazuo Sugeno and Ryuichi Yamakawa, Labor Law (13th Edition), p. 684). In addition, even in cases where the court affirmed the existence of an agreement limiting the job title and job duties, there were cases in which the court ruled that the right to order reassignment to another job classification could be exercised if ‘special circumstances’ were found such that there were justifiable reasons for reassignment to another job classification (Tokyo District Court Judgment of 26 March 2007, (Roudou Hanrei No. 941, p. 33, Employee v Tokio Marine & Nichido Fire Insurance Corporation)).
The Supreme Court Judgement analyzed and reviewed in this article is significant in that (i) it recognised the establishment of an implied agreement to limit the job title and job duties based on the specific factual situation (although the lower courts made the factual findings), (ii) it held that the employer ‘did not have the authority to order reassignment’ to the employee from the outset when a job classification limitation agreement was recognised through the court’s fact-finding, and therefore (iii)it made its decision without considering the validity of the authority to order reassignment or the abuse of authority.
On the other hand, the Supreme Court in this case held that the employer did not have the authority to order the reassignment, and left it to the lower courts to decide what constitutes default or tort and what constitutes ‘damages’ when a reassignment order is made by an employer who does not have the requisite authority.
In addition, this Supreme Court case only assumes that there was an implied agreement based on the findings of fact by the lower courts; accordingly, when discussing reassignment orders made as a measure to avoid future dismissal, there may be room to consider each circumstance that was considered an element of the ‘abuse of rights’ in previous cases as one to determine whether there was an ‘implied agreement’.
It is worth noting that with the April 2024 amendment to the Ordinance for Enforcement of the Labor Standards Act (Act No. 23 of 1947), the notice of working conditions is required to describe the specific workplace and work undertaken and the scope of their changes (article 5, paragraph 1, item (i)-3). After this amendment, it seems that the existence of an explicit agreement based on a written notice of working conditions or an employment contract shall be respected (See Yuichiro Mizumachi et al., ‘Legality of an Order of Reassignment to Another Job Classification in the Case of Abolition of a Job with Job Limitation Agreement (Supreme Court Judgement of 26 April 2024, Employee v Shiga Prefecture Social Welfare Council)’, YOLJ-L2405003 [statement by Tatsuo Nakayama]).
It seems that this Supreme Court case is worth referring to, when considering the validity of agreements to limit and restrict the job title and job duties and the limits of the authority of employer to order reassignments to its employees.
